Is the developed world on the verge of a skills crisis? The challenge is obvious: the quickening pace of technological change has shrunk the shelf life of skills acquired by today’s university graduates to just a few years. In a 2013 Deloitte survey of executives at large companies, 39% said they were either “barely able” or “unable” to meet their needs for talent. And we’re all now fairly used to seeing news headlines about large companies replacing thousands of employees with more digitally skilled workers.

Cathy Benko, a vice chairman at Deloitte, has been studying the various ways companies are working to prevent a skills crisis while transforming for the digital world. In a recent article with AT&T’s chief strategy officer and group president, John Donovan, she describes how AT&T is in a sprint to reinvent itself as its industry moves from cables to the cloud. Rather than hiring new talent wholesale, AT&T has chosen to rapidly reskill more than a hundred thousand of its current employees.

In a recent interview, Benko discussed AT&T’s efforts and offered advice for HR leaders and individual managers on how today’s workforce can avoid obsolescence. An edited version of our conversation follows.

HBR: Companies have two options to meet talent shortages—they can look to an external labor market, or they can focus on developing their internal labor market. Which is proving more popular at the moment?

CB: We’re in the middle of a “skills shift.” A mere 20% of today’s workforce has the skills needed for 60% of the jobs that will be coming online within the next five to ten years. So companies understand a major shift is needed. In our HBR article, my co-author and I highlighted AT&T because it has been strong in its conviction to give its employees—those who have built the brand over the past decades—the opportunity to ensure the continued marketability of their skills through wholesale reskilling. John and I sought to provide a bird’s eye view into AT&T’s talent transformation, both to tell AT&T’s story and to provide a blueprint that may help other companies as they embark on their own transformational journeys.

AT&T’s approach not only gives its people an opportunity that engenders loyalty, it also ensures the integrity and continuity of the institutional knowledge and informal networks that make companies run. It acknowledges that while they can (and do) recruit for new skills, the supply of technical talent with “hot” skills is limited and competition for it is fierce.

The cycle time for new technology has compressed and will continue to do so. In relative short order, today’s sought-after new skills in robotics, software, virtual reality and the like will evolve or obsolesce, so it’s smart to invest, as AT&T is doing, in building a culture of continual reinvention, rather than relying on wholesale talent swap outs.

HBR: This problem feels like it’s bigger than any one company. What do you think policy makers should be doing to address this?

Benko: The educational system plays an important role here. Leading academic institutions are looking at this problem, and some — including Harvard Business School — are expanding programs that take place along the continuum of a career, rather than just in preparation for one. The notion that education ends at the undergraduate level, the master’s level, or even the Ph.D. level is a pretty dated concept.

What’s the attitudinal shift that needs to happen for individual employees and managers to ensure their relevance?

We all need to be cognizant that the systemic, industrial-age corporate ladder approach to career development has given way to a digital-age corporate “lattice” with multidirectional career paths—and all the responsibilities that go along with it. There’s only one CEO of each of our careers—ourselves. And, as CEO, each one of us is responsible for playing an active role in ensuring the relevance of our skills and the continued cultivation of our careers. One way to do so is to periodically “mark to market” skills and capabilities, growing those skills that are market relevant. Go through online job posting sites from time to time to keep a pulse on which skills the market is looking for, and which ones are emerging. Another way to cultivate your career is to think in terms of “career option value”—making yourself marketable for many emerging career possibilities by continually adding to your own portfolio of transferrable skills, networks, and experiences.

Is it dangerous to try to anticipate what the market will be doing in 3 to 5 years, and therefore what skills you should be developing now?

The specific time horizon is less important than the point of keeping your eyes on the horizon as well as on the road. For example, if you’re an engineer, it’s not a tough bet to say that, within a few years, having robotics or augmented reality experience would be appealing. It creates option value. The key is that in the lattice world, continual professional reinvention needs to be something we embrace as a core competency. The capabilities, experiences and relationships that got you the job you have today are transferrable in the future. Instead of climbing the ladder as you might have in the past, you’ll be well-served to also consider lateral or diagonal moves. For instance, a data center operator might make a skills pivot that could lead to a role as a data scientist as some at AT&T have done.

At the institutional level, what are some of the keys to a successful reskilling program?

I’m going to come back to the example of AT&T, because I think one of the things they’ve done very well is to address talent practices and cultural changes as well. Performance and job mobility are aspects of this. While employees with long tenures are valued, people are also now cautioned not to stay in any given role for too long. The thinking is that if you are materially doing the same job for more than 3 to 5 years, it suggests that you may not be growing, building new competencies, expanding networks, etc. Compensation is another area where seniority has been deemphasized at AT&T. Instead, more variable compensation premiums such as bonuses are used to motivate higher performers and to recognize those with “hot job skills”, without making it an entitlement that future compensation increases are based on.

Are we risking institutional ageism when we discount tenure in this way? How do you make sure you’re not assuming that everyone with gray hair doesn’t have the skills you need?

To the contrary, I believe programs like AT&T’s provide opportunities to keep employee populations relevant—and those with relevant skills are less likely to get disintermediated. And while it’s more likely that a boomer tech employee will need to invest time in acquiring new skills that a younger employee may have learned in college, as time goes on and technologies continue to evolve, they too will need to know how to retool as a core competency. The proof is in the proverbial pudding: Last year, 50% of AT&T’s new jobs went to internal people. And with an average tenure of 22 years, those jobs weren’t all going to the newbies.

How do you engage and motivate employees to learn new skills, when we know that engagement is a challenge just for normal work?

Engagement has long been the Achilles heel of organizations. If you look at engagement statistics, the vast majority of people are not actively engaged. So when it comes to unlocking the potential of your workforce, engagement is really the Holy Grail. In the case of AT&T, they were deliberate in mapping out a blueprint of the future capabilities they will need. They have also been transparent with their employees about future prospects by communicating messages such as: “We currently have thousands of hardware engineers, and a few years from now, we’ll probably only need a few hundred or less. If you choose to, we’ll provide you with the opportunity to acquire more contemporary, relevant skills and continue your career journey here. You may elect not to, but be on notice that the further down the road we get, the less likely it will be that we’ll need your services.”

Another example, in a very different context, is Amazon. The company launched a new tuition assistance program called Career Choice. What makes the program unique — aside from its generous 95% tuition reimbursement — is that it recognizes that while some individuals will make their careers at Amazon, others will use it as a stepping stone to something else. Career Choice embraces this, providing employees with opportunities for skills and training that lead to career betterment. Through this program, Amazonians are becoming nurses, pharmacy technicians, IT helpdesk professionals, and commercial truck drivers—all job fields that are in high demand, and that provide opportunities for personal and professional growth.

AT&T and Amazon both offer excellent examples of how to create an authentic emotional investment with your employees. If you can convince your employees that they are deeply involved—and central to—the reinvention of the company, you can in turn spur engagement, productivity, and mutual success.

About the Author: Eben Harrell

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